When buying lottery makes sense,

[ninaprincess]

The current Mega pot is $500 mil, lump sum is $359 mil and after taxes it is about $233 mil.

The odds of hitting the jackpot is 1/176 mil

Doesn’t this make buying lottery profitable as we haven’t even consider the smaller prizes?

[sdrealtor]

Really?

[(former)FormerSanDiegan]

Statistically, the expected return on a $1.00 lottery ticket with a jackpot of 233 Mil and odds of 176 mil:1 is $1.33 (assuming only 1 winning ticket).

Yes. One could aregue that this is one of those rare occasions where, statistically, the expected return (before taxes) is higher than the ticket price for the lottery.

But, then there are the taxes. Also, I ignored the probability of multiple winners.

[ninaprincess]

I already subtracted 35% for taxes. So it is a good investment.

[quote=FormerSanDiegan]
But, then there are the taxes. Also, I ignored the probability of multiple winners.[/quote]

[sdduuuude]

Considering multiple winners of the same prize is important. When the prize gets bigger, more people play. If the number of people playing doubles, it effectively cuts your expected winnings in half.

Even using the 1/176,000,000 figure, you have to include the probability of sharing the prize in your expected value calculation or it’s a bad calculation.

If your expected value was positive, those running it wouldn’t be able to make any money, now would they ?

[sdduuuude]

And if you think the number of players doesn’t increase, consider your own (incorrect) method of determining if it is worth playing and realize that lots of people do the same calculation and decide to play, even if they usually do not.

[sdrealtor]

My brother in law always used to say you cant win if you dont play. I always told him you couldnt lose either.

[scaredyclassic]

Game for suckers

[ninaprincess]

I think you guys don’t understand the point here.

Of course, I understand that lottery only pays out 50% to prizes so by playing you automatically lose 50 cents on the dollar ON AVERAGE. But, there is a difference between the return of a $12 mil jackpot and a $500 mil jackpot.

Yes, it is possible to have multiple winners. But I also mentioned that we have not account for the smaller prizes and I believe that it is more than offset the multiple winners scenario. Since the odds is so low, there haven’t been that many multiple winners with Mega Millions.

I am terrible with statistics and do not have the skills to compute the exact return but my gut feeling here is that currently there is positive return.

[Anonymous]

[quote=sdduuuude]If your expected value was positive, those running it wouldn’t be able to make any money, now would they ?[/quote]

I don’t know the specifics of the CA lottery, but I do know that the payouts are cumulative in many lotteries, so the expected values do change.

There may be situations where in a single play, the player has a positive expected value, but overall the expected value is negative (favors the “house.”) But it is true that it would be impossible to predict the expected value precisely, since it is a function of the number of players.

A while back there was a group of quant traders who would monitor the various lotteries around the world and make large bets on certain days, often traveling to other countries, when the expected return was positive. Some lotteries changed their rules because of these activities.

(I’m including the cost in the expected value, as it seems you are, meaning a “positive” value is a “winning” outcome.)

Remember that the “expected” value is not the one that will happen for sure, and positive expected value doesn’t mean guaranteed win. In fact one could have a random function where it is impossible for the “expected” value to occur at all in a single trial.

But, in general, the lottery is a tax on the stupid.

[moneymaker]

“ninaprincess” I believe you are right! Now I myself will not buy more than $40 in tickets because I think it is a pain to go through them looking for winners. The argument about multiple winners, I believe is irrelevant. The odds are the odds. Doesn’t matter how many people play because the more people play the higher the jackpot,right up until the last ticket is sold. During the last round approx. $188 million tickets were sold yet no one won. I’m going to buy 20 quick picks and 20 self picked tickets and will report the results Saturday morning. “Good Luck to all that are going to be playing” and as in the Hunger Games “may the odds be in your favor”.

P.S.- This is the first time in my memory that it really is not a bad idea to play the lottery.

[Hobie]

C-mon. Where else can you pay a buck and buy several days of dreaming? Cheaper than drinking 😉

True that it plays on the folks who probably really need that money. No offense intended Nina, just a sweeping generalization.

[UCGal]

[quote=Hobie]C-mon. Where else can you pay a buck and buy several days of dreaming? Cheaper than drinking 😉
[/quote]

Also some math… Buying 1 ticket improves your odds infinitly. From zero to great than zero.
Buying the 2nd ticket is a suckers bet… but that first ticket gets you in the game.

[The-Shoveler]

[quote=UCGal][quote=Hobie]C-mon. Where else can you pay a buck and buy several days of dreaming? Cheaper than drinking 😉
[/quote]

Also some math… Buying 1 ticket improves your odds infinitly. From zero to great than zero.
Buying the 2nd ticket is a suckers bet… but that first ticket gets you in the game.[/quote]

+1

Several days of dreaming of massages and umbrella drinks on tropical beaches.
Definitely worth a dollar.

[sdduuuude]

[quote=UCGal][quote=Hobie]C-mon. Where else can you pay a buck and buy several days of dreaming? Cheaper than drinking 😉
[/quote]

Also some math… Buying 1 ticket improves your odds infinitly. From zero to great than zero.
Buying the 2nd ticket is a suckers bet… but that first ticket gets you in the game.[/quote]

Wow. My probability professor just rolled over in his grave and he isn’t even dead yet.

[Author]

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